State of the Union 2018

A new 'Africa-Europe Alliance' for Sustainable Investment and Jobs, and a more efficient financial architecture for external investment

As announced by President Jean-Claude Juncker in his 2018 State of the Union Address, the Commission has proposed an ambitious new 'Africa-Europe Alliance for Sustainable Investment and Jobs', to substantially boost investment in Africa, strengthen trade, create jobs, and invest in education and skills; and a more efficient financial architecture for investment outside the EU, which aims to address the investment challenges and opportunities in Africa, the EU's Neighbourhood and the wider world.

President Juncker said: "Africa does not need charity; it needs true and fair partnership. And we, Europeans need this partnership just as much. Today, we are proposing a new Alliance for Sustainable Investment and Jobs between Europe and Africa. This Alliance, as we envision it, would help create up to 10 million jobs in Africa in the next 5 years alone. I believe we should develop the numerous EU-African trade agreements into a continent-to-continent free trade agreement, as an economic partnership between equals."

A new 'Africa – Europe Alliance for Sustainable Investment and Jobs'

Today's proposal shows commitment to reinforce the Africa-EU Partnership and outlines a series of key actions that include:

boosting strategic investment and strengthening the role of the private sector, notably through increased de-risking of investment projects via blending grants and loans, and guarantees;

investing in people by investing in education and skills, at continental and national level to strengthen employability and match skills and jobs, also including scholarships and exchange programmes, in particular through Erasmus+;

strengthening business environment and investment climate, in particular by strengthening the dialogue with African partners and supporting their reforms in this field;

tapping the full potential of economic integration and trade: building on the African Continental Free Trade Area implementation, the long-term perspective is to create a comprehensive continent-to-continent free trade agreement between the EU and Africa. To prepare this, Economic Partnership Agreements, Free Trade Agreements including the Deep and Comprehensive Free Trade Areas on offer to the countries of North Africa, and other trade regimes with the EU should be exploited to the greatest extent, as building blocks to the benefit of the African Continental Free Trade Area;

mobilising an important package of financial resources, as reflected in particular in the ambitious proposal for the future Multi-Annual Financial Framework of the EU on external funding, where Africa is highlighted as a priority region.

Expected results

The Alliance will lead to concrete results such as the creation of up to 10 million jobs in the next 5 years. With EU financial support mobilised by 2020:

35,000 students and academics from Africa will benefit from Erasmus+ by 2020. A further 70,000 will benefit by 2027, reaching a total of 105,000 in ten years.

750,000 people will receive vocational training for skills development.

30 million people and companies will benefit from access to electricity thanks to the EU's leveraged investment in renewable energy and a boosted generation capacity by 5 GW.

24 million people will have access to all season roads through our leveraged investment in transport infrastructure.

3.2 million jobs in Africa are expected to be created under the External Investment Plan just by the Investment Programmes focussed on small and medium-sized enterprises.

With a guarantee of €75 million, a single investment programme from the External Investment Plan will generate 800,000 jobs.

A more efficient financial architecture to support investment outside the EU

To ensure the EU delivers on its external policy goals and that tax payers' money is spent efficiently, the Commission is ready to provide a stronger policy steer and oversight when it comes to deciding on the use of the EU budget guarantee for external investment – without assuming the tasks of a development bank. In addition, the Commission proposes to coordinate more with Member States upfront in order to speak with one voice in the governance structures of international financial institutions and better meet the EU's development finance objectives. This could, in the long run, pave the way for a joint vote at the Board of the European Bank for Reconstruction and Development on behalf of all EU Member States.

Finally, the EU should set up an external investment platform under the next Multiannual Financial Framework (MFF), bringing together all existing EU budget external investment programmes and instruments under a single platform. The Commission and Member States would set the sectoral and geographical priorities, with independent experts carrying out risk assessments of programmes and portfolios of projects. The European Investment Bank – the EU's partner in investment – and other development finance institutions, on the basis of their respective expertise, would have direct access to the EU guarantee to deliver the highest added value on the ground. The Commission would be responsible for checking the policy compliance of the project pipelines and for the overall management of the use of the EU guarantee, however without carrying out any banking operations.

Related links

Towards a new 'Africa - Europe Alliance' to deepen economic relations and boost investment and jobs

Press release and Q&A - State of the Union 2018: Towards a new 'Africa – Europe Alliance for Sustainable Investment and Jobs'